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IBM has good credit rating and can borrow at fixed rate of 4% for 10 years and float rate of LIBOR for 10 years. Ford

IBM has good credit rating and can borrow at fixed rate of 4% for 10 years and float rate of LIBOR for 10 years. Ford has lower credit rating and can borrow at fixed rate of 5.5% for 10 years and LIBOR + 1% for float rate debts. A. Design a swap such that both firms can save on the debts they wanted (you must specify which company ended up with float rate and which ended up with fixed rate). B. If the LIBOR rate for the next 3 years is 3.75%, 4.25% and 4.75%, show the net payment to/from IBM on $2 billion notional amount

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